Taxpayer Protection Cap in State Constitution Approved by N.C. House

Raleigh, N.C. – The state House of Representatives on Tuesday approved a constitutional amendment proposal for voters to decide in November whether to lower the cap on North Carolina’s personal income and corporate tax from 10% to 7%.

“This puts on the ballot for all voters the chance to decide on a constitutional rate cap that would safeguard substantial tax relief and protect taxpayers from harmful rate increases,” said Rep. Jason Saine (R-Lincoln), a chairman of the House Finance Committee, during debate on the measure Wednesday.

Since 2011, North Carolina has a lower sales tax rate, income tax rate, and corporate tax rate under Republican leadership in the state General Assembly.

By contrast, North Carolina’s sales tax was raised in 2003, 2005, 2007, and 2009, under Democrat leadership.

If approved by voters, the state’s new income tax cap of 7% would take effect on January 1, 2019.

State House Speaker Tim Moore (R-Cleveland) said lowering the state’s income and corporate tax cap is essential to protect citizens against future tax increases by Gov. Roy Cooper, who sought to raise taxes in his 2018 spending plan:

“The governor’s budget proposal to raise taxes and still overspend into a $470 million budget deficit is an important reason North Carolina needs this constitutional amendment to protect taxpayers and maintain economic momentum,” said House Speaker Tim Moore (R-Cleveland).

Economic Success in North Carolina After Tax Reform

North Carolina has a record $2 billion savings reserve fund and a $356 million revenue surplus in 2018 following tax relief for families and businesses totaling more than $4 billion this decade.

North Carolina was 1 of 12 states with a unanimous ‘AAA’ credit rating from all three major rating agencies in 2017 and recently enacted a savings reserve requirement praised by Moody’s Investor Service to “improve the state’s financial flexibility and its ability to respond to future contingencies.”

Last year, Moody’s Analytics rating agency also named North Carolina 1 of 16 states prepared for an economic recession.

“Constitutional amendments require a high threshold of support and voter approval, but protecting taxpayers is of immense and immediate importance to families and businesses in North Carolina.”

North Carolina Maintains Spending Priorities

North Carolina has the third fastest rising teacher pay in the U.S. over the last five years, according to the left-leaning National Education Association. The ranking doesn’t include the fifth consecutive teacher pay raise averaging 6.5% provided to educators in 2018.

North Carolina advanced 10 spots in national teacher pay rankings over four years, from 47th to 37th, following significant raises provided by the state General Assembly since 2014.

Correctional officers are receiving a fourth consecutive pay increase in 2018, for example, increasing the average salary of a maximum security correctional officer over $9,000 by 2019.

The 2018 state budget spends an additional $700 million per year on K-12 public education. North Carolina spends over a billion dollars more on education annually since Republicans gained control of the state legislature in 2011.

North Carolina ranks 5th in the country for per-student spending on public colleges and universities. A statewide ConnectNC bond to build new STEM facilities on university campuses is investing nearly $2 billion into higher education, with a cash flow reaching $40 million per month by 2019.